The increasing trend in both headline and core inflation continued, reflecting the rise in demand driven inflationary pressures in the economy. Supply side disruptions arising from adverse weather conditions and the revisions introduced to the tax structure by the government also contributed to the upward movement in inflation in the past two months. Meanwhile, in the real sector, the available indicators suggest a continuation of the growth momentum in economic activity. In particular, power generation, tourism and port related services, construction sector, investment goods imports as well as the purchasing managers’ indices (PMI) for manufacturing and services sectors have shown improvements over the past few months.

The Manufacturing PMI recovered to the positive territory in June 2016 registering 55.1 index points, from the contraction observed in the last two months, which is an increase of 7.2 index points from May 2016. This improvement was bolstered by the significant increase observed in Production and New Orders Indices. Moreover, all the Sub-indices of PMI, apart from Suppliers’ Delivery Time increased compared to the previous month. Overall data points to an expansion where all the sub-indices apart from the Employment Index are above the neutral 50.0 threshold. The expectations for activities also indicated an improvement for the next three months. On yearon-year basis, the PMI index witnesses a marginal drop of 2.4 index points compared to June 2015.